Rakon/Huawei Announce Technology Partnership

China General Interest

New Zealand high technology company Rakon signed a letter of intent in August 2012 with Huawei Technologies Co. Ltd, which targets a quadrupling of Rakon’s sales to Huawei over the next five years to US$56 million.

Rakon’s product range, advanced technology and competitiveness were significant factors for Huawei, who will use the company’s frequency control products in its handsets, smart devices and infrastructure programmes.

Rakon’s Managing Director, Brent Robinson, says the company had been working closely with Huawei for some years. “The letter of intent recognises the greater scale and breadth of our product range, validates our commitment to a strategy of globalisation and our investment in operations in China.”

Rakon’s success is testament to New Zealand’s ability to produce world-leading products and innovations and Brent Robinson also credits the assistance of Trade Minister, Tim Groser and New Zealand Trade and Enterprise (NZTE) in helping facilitate the deal, as well as the 2011 trade mission to China that was a catalyst for the enhanced relationship with Huawei.

“This is a significant partnership for Huawei, with Rakon providing crucial electronic components”, said a Huawei spokesman, stating that Huawei’s supply chain is truly global, with only the most impressive and competitive suppliers selected.

The signing ceremony, held at NZ Trade & Enterprise’s Wellington office, was attended by dignitaries and senior executives including Mr. Ping Guo, Huawei Deputy Chairman, the Chinese Ambassador to New Zealand, His Excellency, Xu Jianguo, the Minister of Trade, Mr Tim Groser and the letter of intent signed by Mr. Fuhai Yao, Huawei President of Global Procurement.

Since Rakon’s early days, China has been identified as a pivotal market and manufacturing base and in 2011 the company invested NZ$50m in a new factory located in Chengdu’s High-tech Industrial Development Zone. The investment is a joint venture with leading quartz blank company Timemaker, who hold a 15% stake in the company.

Rakon’s investment is regarded as one of the most significant made in China by any New Zealand company and Mr Robinson said it forms a vital part of Rakon’s strategic growth plan.

The Chengdu operation provides significant additional capacity for products manufactured for the high volume smart wireless devices market. The massive popularity of smart phones in China, driven by the roll out of 3G networks, is causing a fundamental shift in the domestic handset industry as Chinese consumers demand the higher specification features of smart phones. China has overtaken the United States as the world’s top smart phone market by volume and is expected to have 20% of the global smart phone market by 2016.

Rakon is a market leader in China supplying most of the tier two and three domestic brands and is fast gaining traction with the tier-one Chinese smart phone brands like Huawei.

The Chengdu manufacturing operation is one of the industry’s most high-tech plants. The facility is located in the global epi-centre of electronics industry and provides Rakon with the scale and flexibility to expand and migrate other products into the facility as demand grows. It also provides an element of future-proofing for the company, with options to manufacture products for other applications.

The investment in a purpose-built manufacturing facility offers long term material cost saving benefits, greater control of the supply chain and proximity to major customers that include network infrastructure giants like Huawei, as well as a booming consumer market.

It provides a platform to support Rakon’s consistent growth in activities in China to date; the company’s five year old branches in Shenzhen, Shanghai and Beijing will provide marketing and technical support services to Rakon Group, supporting that in Taiwan which was established almost 10 years ago.

Mr Robinson said he believed a close relationship between Rakon and Huawei would provide significant benefits for both parties.

About Rakon

Rakon is a global high technology company that designs and manufactures world leading frequency control solutions. Rakon products are at the forefront of enabling connectivity, faster and more reliably.

Rakon is the chosen partner for many of the world's leading electronics manufacturers’ and biggest technology brands.

Rakon targets markets that demand high performance and reliability and have high-growth potential, such as GPS for positioning, navigation devices, smart phones and tablets, 4G telecommunications infrastructure and space satellites.

Rakon’s global staff numbers are over 2100 including JVs in India and China.

Since 2006 Rakon has transitioned to become one of the largest global providers of frequency control solutions and has built a world class R&D and global manufacturing platform in NZ, UK, France, India and China; offering a complete and diversified product portfolio into multiple high growth markets.

www.rakon.com

About Huawei

Huawei is a global technology company operating in over 140 countries with unaudited revenues of US$32b in 2011. The company aims to be a top-5 global smart phone vendor in the next 3 years and is on track to become the world’s largest telecoms vendor in 2012.

Huawei is a leading global information and communications technology (ICT) solutions provider. Through its dedication to customer-centric innovation and strong partnerships, it has established end-to-end advantages in telecom networks, devices and cloud computing. Huawei is committed to creating maximum value for telecom operators, enterprises and consumers by providing competitive solutions and services. Our products and solutions have been deployed in over 140 countries, serving more than one third of the world’s population.